Market Update from CIO Dave Klassen - 2019 June

MARKETS

  • Global financial markets were positive in June as the markets reversed the negative results of May. The S&P 500, which tracks large cap U.S. stocks, was up 7.05% in June and is up 18.54% Y-T-D. The Russell 2000 Index, which tracks domestic small cap stocks increased 7.07% in June and is up 16.98% Y-T-D. The International developed equity index (MSCI EAFE), increased by 5.93% in June and is up 14.03% Y-T-D. The emerging markets index (MSCI EM) increased 6.24% in June and is up 10.58% Y-T-D.
  • In June, bond yields decreased, and prices increased; the 30-year U.S. Treasury bond yield decreased 6bps to 2.52%, while the 10-year yield decreased 14bps to 2.00%, and the 5-year yield decreased 17bps to 1.76%..
  • The Barclays Aggregate Index, which is a measure of U.S. Bond prices, increased 1.26% for June and is up 6.11% Y-T-D.

ECONOMIC AND GEOPOLITICAL HEADLINES

  • U.S. gross domestic product (GDP) in the first quarter of 2019 increased 3.1%, according to the “third” estimate released by the Bureau of Economic Analysis. Fourth quarter 2018 GDP increased 2.2%.
  • The June Purchasing Managers Index (PMI) was little-changed at 50.6 from 50.5 in the previous month.  Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
  • June non-farm employment increased by 224,000 jobs, and the unemployment rate was little- changed at 3.7%, as reported by the Bureau of Labor Statistics on July 5th. Employment trended positively in professional and business services, in health care, and in transportation and warehousing.  Average Hourly Earnings (wages) increased 3.1% year-over-year.

PERFORMANCE UPDATES

  • Net of all fees, accumulation funds were positive in June.  The Equity Fund increased 6.07% in June and is up 15.76% Y-T-D. The Bond Fund was up 1.57% in June and is up 6.70% Y-T-D. The Stable Value Fund was up 0.16% for June and is up 0.93% Y-T-D. The Northern Trust Global Sustainability Index Fund (GSIF) increased 6.31% for June and is up 16.36% Y-T-D.
  • The Balanced Fund increased 4.00% in June and is up 11.37% Y-T-D. The Target Annuitization Date (TAD) 2020; TAD 2025; TAD 2030; TAD 2035; and TAD 2040 were up +0.83%, 3.11%, 4.09%, 4.54% and 4.79% respectively for June and are up 3.27%, 9.07%, 11.35%, 12.43% and 13.04% Y-T-D, respectively.